Bitcoin Updates
By Alok Tiwari on The Capital
Introduction :
Observing the bitcoin movement during recent events around the world has helped substantiate its position as digital gold. The crisis in Venezuela, US operations in the Middle east now the Corona-virus turmoil, all these events were followed by a rally in Bitcoin and a fall in equity markets in most of the cases. However, statistically speaking, the daily change correlation between S&P500 and Bitcoin daily percentage change for the period of last 3 months is -0.1. Though it is a negative correlation, the magnitude is not significant enough at all.
While the world is believing that the rally in bitcoin and other Cryptos is fueled by the Corona-virus turmoil going on in Asia, today we will try to look at other evidence, both technical and fundamental which suggest that the rally was evident. We will also try to look at the facts which will help us gauze the future moves of the digital gold.
A look at the charts :
Weekly Charts:
As we can visualize in the charts, the prices have bounced off a long term uptrend line. It has also broken out of an intermediate term downward channel.
On the indicators front, the RSI has crossed the 50 levels and has sustained in the bullish territory since the last few weeks which is a very bullish sign.
The volumes during the last up move leg were rising and the volumes during the recent downward channel were falling which indicates that the volumes have confirmed an upward move and the downward channel should be considered as a corrective phase.
4 Hours Chart:
The prices have shown a good recovery from the 6700 levels and are trading just below a horizontal resistance zone and look extended from the 200 periods moving average. To continue the bull run, the bulls will need to aggressively take off the resistance with volume support.
RSI has moved lower from the Overbought levels and we can observe a minor divergence which suggests that we can expect a correction. If the prices correct, 200 EMA will act as the immediate support level.
Let's have a look at some of the fundamental data :
The number of transactions per day has been on a decline since May 2019 but the data shows that the decline has stabilized and might increase from here on.
The F2Pool stands on the top contributing 18.7% to the network hash-rate followed by AntPool and Poolin. All the major pools have managed to stay in the business even after the miner's revenue have decreased due to a decline in bitcoin prices.
Conclusion :
The long term weekly charts look bullish while on the 4 hours chart, we can expect some correction. However if on the 4-hour chart, bulls are able to decisively break the resistance, we can expect to see higher price levels. Halving is one important factor which might fuel the next bull run as it has done two times historically. It is not a significant sample size but we will try to cover the effects of halving in my coming posts.
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